Space: Another HR Frontier

Before Thomson Legal and Regulatory Group redesigned its St. Paul, Minn., headquarters, the place looked similar to most business settings across America. “It had a look and feel typical of the ’80s and ’90s,” says Tim Blank, vice president of HR-Technology at the provider of legal, tax and other information. “When you stepped onto any of the six floors, you’d see a vast sea of gray-color cubes—with a little bit of contrast in wallpaper and carpeting. It was efficient in terms of layout, but not real inviting and warm.”

If you looked at space utilization as a cost center, the facilities guys were doing a good job. But for CEO Brian Hall, controlling costs wasn’t the only goal. He wanted the space and its design to convey Thomson’s fast-paced, collaborative corporate vision. And he reasoned that topflight talent would be more likely to come and stay if the physical environment was attractive as well as efficient.

That’s why Hall took a step that too many employers are overlooking. He brought HR into the picture, appointing Blank, representatives of line business units and the facilities head to a team to address all the key issues.

“We aim to be an employer of choice, and that’s where HR comes in,” Blank says. “We ended up with new workstations, teaming spaces, soft seating areas [such as armchairs and other comfortable seats] and computer labs. There are still cubicles, but they’ve been redesigned to balance the need for privacy with the ability to quickly move your chair into a team environment, or into a soft seating area where you can hold an impromptu meeting. There are whiteboards everywhere.”

The fourth floor was transformed into Main Street, drawing workers from throughout the building to a centralized hub. Workers from all departments cross paths as they exit the elevators, walking and talking by glassed-in offices of the top executives—which were relocated from the remote corners of top floors where they were out of sight.

Along with a traditional cafeteria, the “downtown” features a coffee hangout called Café.Com where people can conduct business in private nooks or in the open while sipping coffee. News junkies watch CNN; at the employee store, you can get most anything—candy, food, greeting cards, logo-wear clothing. There’s also dry-cleaning services, a florist, a travel agency and a credit union.

Blank was expected to document the effectiveness of the new design, and he hasn’t disappointed. The HR-administered “Employer of Choice Survey” shows higher satisfaction ratings on work environment questions. Turnover fell from 13.9 percent in 1999 to 12.8 percent in 2000 to 7 percent in 2001.

Other metrics, like cycle time for production of new software products, are encouraging as well. “We’re now able to produce two or three new software releases in a year, whereas in the past it would take a year or more to produce only one,” says Blank.

Though it’s unlikely that the design changes were the sole reason for these improvements, Blank has no doubt they were instrumental. Current research suggests he’s correct.

Emerging HR Competency

There’s compelling evidence that the physical environment affects not only health and safety, but performance as well. In Right Management Consultants’ survey of 3,500 “high-value, top-performing” employees from 26 organizations, respondents said “work environment” was the most important factor influencing their desire to stay with the organization.

“Workers want environments where they can work flexibly, where they can work collaboratively and feel they’re in the loop,” says Rich Pinola, Right’s CEO in Philadelphia. “They may not talk specifically about walls and workstations, but the way an office is configured says volumes about whether a culture is open and flexible.”

Top performing employees aren’t the only ones who see an HR aspect to office design. In fact, senior executives believe HR should be more involved in designing workspaces.

A recent study at the University of Michigan School of Business pinpoints the new competencies HR executives must master to function fully as business partners. It found that senior management expects HR to play a key role in ensuring that facilities support the culture and send the right messages.

“Buildings have tended to be designed by people for beauty and technical soundness, but there’s more to it,” says Wayne Brockbank, clinical professor of business at the University of Michigan School of Business. “With an informed HR in the picture, design can be linked to purpose. The key HR role is—within your financial constraints—to figure out how to make sure you have the best people, with the right focus, working effectively in collaboration. It comes down to using design to promote the culture you’re trying to create, to make sure people who should sit next to each other do, and to send messages about the nature of the organization’s leadership.”

Behind the Curve

With a few notable exceptions, however—such as Thomson Legal and Regulatory Group—HR is struggling to rise to the challenge of making office design work better.

“HR is rarely involved with planning and design, and, when it is, sadly its voice is very conservative,” says Franklin Becker, director of the International Workplace Studies Program at Cornell University. “HR is not in the forefront pushing for innovations like team-based offices or hoteling. They’re a force for the status quo.”

“I would like to see HR have a more active role, but, when they do, they have to be knowledgeable about the issues,” says Janice Carleen Linster, principal and director of workplace strategy at Ellerbe Becket, an architecture, interior design and engineering firm in Minneapolis. “I wish I could say that in 90 percent of our projects, HR is front and center, but it’s not happening. They are connected when wellness and ergonomics issues are involved, but they could do so much more if they were partners in our process.”

The disconnect starts with education. “If you look at HR training, there’s not a single course that deals with the physical environment,” Becker says. “So why would you expect HR to be aware of the relationship between design and human performance?”

Steve Lockwood, principal at Foresight Associates in Stillwater, Minn., agrees. “Design is not in the mainstream of disciplines that HR gets. When HR people are made to think about it, it’s through ergonomics and the impact of OSHA—suit avoidance kinds of things. They’re not taught to look at design proactively.”

When it comes to understanding business and human capital, designers—and even most architects—are no better off. They’re good at their craft, and they create space that’s beautiful and technically sound. But they’re not attuned to the nature of the culture and organization.

“Most design schools don’t teach about business,” says Arnold Levin, design principal at Mancini Duffy, an architecture and design firm in Washington, D.C. “They’re not trained in business strategy, so they have no basis against which to evaluate a client’s business needs.”

They’re also not trained to do research about what works and doesn’t, adds Michael Brill, president of BOSTI Associates in Buffalo, N.Y., and founder of the School of Architecture at the University of Buffalo. And that’s where HR comes in.

Making the Business Case

Facilities managers and HR share the thankless task of managing areas that are constantly squeezed for cash. Overall, staffing has taken the biggest hit in the last decade. Next in line have been facilities. “Over the last 10 years most organizations have reduced real-estate costs from 10 to 15 percent,” Lockwood says. “Now they’re being asked to slash another 5 to 8 percent.”

Historically, CEOs have viewed facilities as a cost center, funding design, construction and furnishings on a square-foot-per-person basis. Successful facilities managers stayed within the budget. There was no incentive to explore ways to make the environment more attractive and supportive of work.

It’s only recently that design pros and facilities managers are beginning to see the light. HR and its retention, performance and worker-satisfaction metrics can help them make the case for their projects.

“Blame it on the silo mentality in corporations—neither group has understood the value they could bring to each other,” says Becker. “What you’d like to see is HR working collaboratively with facilities, IT and the business units to design a structure that will support the organization culture and mission.”

Perhaps such partnerships might alleviate the problem that is evident to Sharon VanderKaay—designer at Murphy Hilgers Architects in Toronto. VanderKaay says too often space decisions produce crowded, noisy environments that are not conducive to collaboration or private work.

Why? Because management mistakenly believes that real estate, which accounts for less than 10 percent of operating costs, has little or no impact on human resources, which accounts for 80 percent of operating costs.

The situation, she says, cries out for HR to focus on the strategic importance of the physical environment. “The payoff will be higher performance, smarter decision-making, increased informal learning and, ultimately, stronger customer relationships.”

Perhaps Chuck Saylor, president of izzydesign, a design, engineering and furniture manufacturing company in Grand Rapids, Mich., best captures the folly of excluding HR from the equation. “It’s not about the furniture,” he says. “It’s the people, stupid!”

Robert J. Grossman, a contributing editor of HR Magazine, is a lawyer and a professor of management studies at Marist College in Poughkeepsie, N.Y.